Online banking in China has suffered badly at the hands of online and mobile payment providers over the past few years. In the second quarter of this year, transaction volumes fell for the first time ever.

After several quarters of lackluster growth, the total value of online banking transactions in China dropped by 6.8% in Q2 2017 to 503.1 trillion yuan (US$76.34 trillion).

Despite banks’ introduction of new services to their online platforms, they have proven unable to compete with the flexibility and utility of online and mobile payment services and have steadily lost market share. One bright spot for banks has been business services, which have grown steadily despite the intrusion of third-party payment providers.

Within this market, ICBC remains the market leader, accounting for 28.5% of all transactions by value, followed by CCB at 14.9% and Bank of Communications at 11.2%. ICBC is a leader in business services and has innovated in the retail banking sector with the introduction of an AI customer service interface to maintain its lead even as the market as a whole suffers.

Tencent and Weibo have a market share of 56.8% and 29.5% respectively accounting for 80% of total market share in China.

Tencent’s social ads and marketing assets include WeChat (Official Accounts and WeChat Moments) and QZone.

Check out China online advertising market overview for Q2 2017 here and here.

China’s B2C apparel market reached 307.74 billion yuan (US$46.37 bn) in Q2 2017 with an increase of 47.3%.

Tmall has 80.7% market share in China’s B2C online clothing market in Q2 2017, followed by JD (8.7%) and Vipshop.

The online retail market in China reached 1.59 trillion yuan (US$244.6 billion) in the second quarter of 2017 (up 31.2% over Q2 2016), with B2C sales accounting for 860.5 billion yuan (US$132.4 billion), an increase of 32% over the second quarter of 2016. Read more »

Also read: China cross-border e-commerce market 2017

China online dating market totaled 1.207 billion yuan (US$180 million) in Q2 2017 with a growth rate of 39.2% YoY or 21.9% QoQ.

The top four online dating platforms (Zhenai, Youyuan, Jiayuan and Baihe) account for 80.1% total market share, 2.3 percentage higher than Q1 2017.

China’s online dating user spend an average of 2.45 hours in Q2 2017. Jiayuan user spent the longest, 4.9 hours per quarter.

China online accommodation market totaled 39.38 billion yuan (US$5.97 billion) with an increase of 27.1% YoY according to data from Analysis.

Ctrip leads China’s online accommodation market in Q2 2017 with 46.7% market share, followed by Qunar, Meituan and Alitrip.

While China’s more affluent consumers increasingly favor independent travel, the online holiday and group tour booking market is still showing rapid growth, likely driven by continued expansion of the middle class in China. China online holiday booking market overview Q2 2017 »

China online tourism market analysis 2017

The online retail market in China reached 1.59 trillion yuan (US$244.6 billion) in the second quarter of 2017 (up 31.2% over Q2 2016), with B2C sales accounting for 860.5 billion yuan (US$132.4 billion), an increase of 32% over the second quarter of 2016.

The second quarter is the traditional peak of the online sales season in China, with JD.com’s 6.18 (June 18th, a major promotional activity for online sales) having caught on and developed into a summertime companion to 11.11 (the winter sales peak, comparable to the US’s Cyber Monday).

This year, retailers unveiled major promotional initiatives including advertising, discounts, and interactive and live activities. At the end of Q2, data showed that Tmall had captured 51.3% of the online B2C retail market, with JD.com as its primary competitor with 32.9%.

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Tmall was able to leverage big data to better meet consumer demand and envisage different demand scenarios, improve its shopping guides, and broaden its distribution channels. JD.com reached a total turnover of 119.9 billion yuan (US$184.5 billion) during its 6.18 promotion, breaking its prior record; it also introduced a series of offline promotional activities called “6.18 Offline”.

Vipshop harnessed a drive for quality among consumers as a new growth engine, with the slogan “Global selection, genuine articles”, while splitting off its finance business and restructuring its logistics business.

A new round of competition in online retail is in the offing, even as major players continue to experiment with foreign brand offerings, improving logistics, and expanding into cross-border e-commerce.

While China’s more affluent consumers increasingly favor independent travel, the online holiday and group tour booking market is still showing rapid growth, likely driven by continued expansion of the middle class in China.

In the second quarter of 2017, China’s online holiday booking market grew to 21.77 billion yuan (US$3.26 billion), equating to year-on-year growth of 28%.

While this figure is slightly lower than that for Q1 2017, this is common as the second quarter in China lacks any long public holidays and opportunities for travel are more limited; traditionally, the first and third quarters are peak season for group tour bookings.

During 2017, the National Tourism Administration has taken measures to combat group tours with unrealistically low prices, believing that these are likely to be low-quality and rely on forcing tourists to engage in activities and shopping for added fees in order to recoup costs.

This policy has come as part of a comprehensive effort to revamp and improve the quality of group tours in China and make high-quality travel more accessible to the burgeoning middle-class, as well as to restrain monopolistic practices and anti-competitive pricing.

Travel e-commerce platforms including Tuniu and Ctrip have responded with their own efforts to increase quality and standardize customer experiences. Ctrip released a new “diamond standard” rating system and released a new high-end line of tours.

Lvmama’s “Happy Donkeyback Travel” line also received an upgrade, wherein the platform began enforcing a “no forced shopping, no hidden costs” program and worked to make sure tour operators weren’t receiving kickbacks and commissions from local sites and retailers.

In addition, market trends towards independent travel are forcing tour providers to move in the direction of greater personalization and more authentic experiences for tourists. Themed tours are becoming more common, including food and minority culture tours.

Capital is continuing to flood the market, with startup “Travel Book” completing A round financing for more than 10 million yuan (US$1.5 million). Travel Book is a building a travel planner and tour guide platform which will help travelers put together optimized itineraries and daily plans for travel on tours and independent trips.

Regarding market share in the second quarter, Tuniu (with 26.83%) and Ctrip (with 22.84%) remain the top two players in the market, sharing half of the market between them. Tuniu has been able to strengthen its supply chain and improve member services, and has earned customer approbation with its strong customer service and professional tour guides.

It’s innovative review system allows customers to compare hotels, sites, and experiences from inside and outside packaged tours to better choose tour packages for themselves. Ctrip is leveraging its acquisition of Qunar to build a better e-commerce platform for tours, and totaled 4.92 billion yuan (US$ 737.6 million) in tour revenue in Q2.

Below the top two, LY.com and Lvmama maintained market shares of  14.52% and 14.35%, respectively. They, too, worked to improve quality and standardization, with Lvmama in particular trying to build a set of personalized and highly diverse tour packages for its customers.

Analysys analysts believe that online holiday market will continue to expand and customer habits continue to develop, as resort packages are being accepted by a wider range of markets.

Given the demand for personalization, enterprises are working to optimize operational efficiency, and continuously drive product and service segmentation and personalized upgrades. Enterprises are moving from business development towards a deeper cultivation of their customer bases, pointing towards a healthy trend of development within the overall market.

Momo, one of the top social networking mobile app, monthly active users (“MAU”) reached 91.3 million in June 2017, compared to 74.8 million in June 2016 according to its financial results.

Its user growth was driven by the expansion of the video content ecosystem. The usage of short video service has reached new milestones and revenues from live video service have hit new record highs.

Momo’s total paying users of its value-added service were 4.5 million and 3.2 million as of June 30, 2017 and 2016, respectively.

Its net revenues increased 215% year over year to $312.2 million. Net income attributable to Momo Inc. increased to $60.8 million in the second quarter of 2017 from $15.4 million in the same period last year.

Live video service continued its momentum and generated revenues of $259.4 million in Q2 2017. The rapid growth in live video revenues was largely contributed by the increase in the quarterly paying users, which was 4.1 million for the second quarter of 2017, and to a lesser extent, the increase in the average revenues per paying user per quarter.

Non-GAAP net income attributable to Momo Inc. (Note 1) increased 218% to $73.8 million in Q2 2017 from $23.2 million in Q2 2016.

WeChat MAU grew 19.5% to 963M; QQ down to 850M in Q2 2017

Alibaba Group reported total revenue of RMB50,184 million (US$7,403 million) for Q2 2017, an increase of 56% year-over-year. Tmall recorded 49% year-over-year growth for physical goods GMV. 

• Revenue from core commerce increased 58% year-over-year to RMB43,027 million (US$6,347 million).
• Revenue from cloud computing increased 96% year-over-year to RMB2,431 million (US$359 million); it reached a key milestone of exceeding one million paying customer
• Revenue from digital media and entertainment increased 30% year-over-year to RMB4,081 million (US$602 million).
• Revenue from innovation initiatives and others increased 21% year-over-year to RMB645 million (US$95 million)

Tmall recorded 49% year-over-year growth for physical goods GMV in the quarter ended June 30, 2017. Fashion and apparel, consumer electronics and fast moving consumer goods, or FMCG, were among the key categories that experienced robust and reaccelerating GMV growth during the quarter according to Alibaba.

JD’s GMV for Q2 2017 increased by 46% to 234.8 billion yuan (US$34.6 billion).

Alibaba has established Tmall as a leading brand-building and distribution platform that is capturing increasing digital marketing and commerce spending from owners of both domestic and international branded products that are doing business in China. During the quarter, international brands such as Moet Hennessy, Victoria’s Secret, Roland and Abercrombie & Fitch established Tmall flagship stores to engage with and sell their
products to consumers on its platforms.

Annual active consumers (annual active buyers) on Alibaba’s China retail marketplaces reached 466 million, an increase of 12 million from the 12-month period ended March 31, 2017. Mobile MAUs on its China retail marketplaces reached 529 million in June, an increase of 22 million over March 2017.

Net income was RMB14,031 million (US$2,070 million), income from operations was RMB17,513 million (US$2,583 million) and adjusted EBITDA was RMB25,124 million (US$3,706 million). Operating margin was 35%, adjusted EBITDA margin was 50% and adjusted EBITA margin for core commerce was 63%。

Integration of online and offline retail experience

In May 2017, Alibaba completed the privatization and the acquisition of a controlling stake in Intime Retail Group for HK$12.6 billion (US$1.6 billion). Intime is a leading department store and mall operator in China with 49 department stores and shopping malls as of June 30, 2017.

Alibaba expects Intime to support its strategy to transform conventional retail, especially in soft goods and branded products, by leveraging Alibaba’s  substantial consumer reach, insight, and technology.

International expansion

Revenue from Alibaba’s international commerce retail business reached meaningful scale at RMB2,638 million (US$389 million) in the quarter ended June 30, 2017, representing a 136% year-on-year growth, driven by strong growth in its Southeast Asian platform Lazada (Alibaba increased its ownership in Lazada to 83%)and its China outbound platform AliExpress.

Lazada launched “Taobao Collection” in Singapore and Malaysia, which expands Lazada’s product offering by giving local customers access to products from China.

In June, Alibaba hosted Gateway ’17 in Detroit, Michigan – a conference where 3000 U.S. small businesses, farmers, brands, and entrepreneurs attended to learn about how to sell to China using Alibaba as their gateway. Businesses such as Gerber, Stadium Goods, and 100% Pure shared their experiences on how Alibaba has helped them grow their businesses by tapping into the China market, which is good for the Chinese consumer as well as for business growth and jobs creation in the United States.

On September 25, Alibaba will host a similar event in Canada to educate and engage Canadian businesses in selling to China.

In July Alibaba launched its first AI-powered voice assistant, Tmall Genie, which was developed by Alibaba’s AI Lab leveraging Alibaba’s AI technology. The Tmall Genie assists with shopping, ordering local services, searching for information, controlling smart appliances and playing multi-media content, including educational stories and music for children.

In August, with Marriott, Alibaba established a joint venture to provide a completely new travel experience for hundreds of millions of Chinese consumers with personalized VIP experiences, cashless travel and an integrated loyalty program.

E-commerce development in China’s rural areas in H1 2017

The total number of monthly active users on WeChat reached 963 million, an increase of 19.5% YoY according to Tencent’s latest financial results. QQ MAUs dropped 3.9% to 662 million.

Tencent achieved 59% YoY revenue growth in Q2 2017 to RMB 56,606 million (USD8,356 million), driven primarily by smart phone games and PC games, payment related services, online advertising, and digital content subscriptions and sales.

• Value Added Services Revenues increased by 43% to RMB36,804 million for 2Q2017 on a YoY basis.
• Online games revenues increased by 39% to RMB23,861 million, primarily driven by revenue growth from Tencent’s smartphone games, including existing titles such as Honour of Kings, and new titles such as the China version of Contra Return, Dragon Nest Mobile and Legacy TLBB Mobile, and from our key PC titles such as LoL and DnF.
• Social networks revenues increased by 51% to RMB 12,943 million, mainly reflecting growth in revenues from digital content services such as live broadcast, video and music, as well as from item sales in smart phone games.
• Online advertising revenues increased by 55% to RMB10,148 million for 2Q2017 on a YoY basis.
• Media advertising revenues grew by 48% to RMB4,077 million. The increase mainly reflected higher traffic for Tencent Video services and news feed advertisements for our Tencent News products.
• Social and others advertising revenues grew by 61% to RMB6,071 million. The increase primarily reflected growth in advertising revenues derived from WeChat and other mobile apps.

Its operating profit grew by 57% YoY to RMB 22,560 million (USD3,330 million). Profit attributable to equity holders of the Company increased by 70% YoY to RMB 18,231 million (USD2,691 million). Non-GAAP profit attributable to equity holders of the Company increased by 45% YoY. Free cash flow grew by 80% YoY.

Tencent’s Digital Property Update for Q2 2017

Monthly active user accounts (“MAU”) of QQ was 850 million, a decrease of 5.4% YoY. Smart device MAU of QQ was 662 million, a decrease of 3.9% YoY. Peak concurrent user accounts (“PCU”) of QQ (for the quarter) was 268 million, an increase of 8.4% YoY.

Related: Weibo MAU up 28% to 361 million in June 2017

Smart device MAU for users aged 21 years or below was up YoY, demonstrating QQ’s increased popularity among younger users. Popular features within Mobile QQ, such as Kandian news feeds, increased average user time spent within Mobile QQ.

Combined MAU of Weixin and WeChat were 963 million, an increase of 19.5% YoY.

MAU of Qzone was 606 million, a decrease of 7.0% YoY. Smart device MAU of Qzone was 586 million, a decrease of 3.5% YoY. Tencent introduced campus page to increase engagement among users in high schools and colleges.

Fee-based VAS registered subscriptions were 118 million, an increase of 12.4% YoY.

China mobile social app users’ purchase behavior overview 2017

For the second quarter of 2017, Weibo reported net revenues of $253.4 million and 361 million monthly active users.

Weibo’s net revenues totaled $253.4 million, an increase of 72% year-over-year. Advertising and marketing revenues were $218.3 million, an increase of 72% year-over-year. Other revenues were $35.0 million, an increase of 78% year-over-year.

Net income attributable to Weibo was $73.5 million, an increase of 184% year-over-year, and diluted net income per share was $0.33, compared to $0.12 for the same period last year.

Non-GAAP net income attributable to Weibo was $86.7 million, an increase of 144% year-over-year, and non-GAAP diluted net income per share was $0.38, compared to $0.16 for the same period last year. Adjusted EBITDA was $103.1 million, an increase of 166% year-over-year, or 41% of net revenues, compared to 26% for the same period last year.

Monthly active users (“MAUs”) in June 2017 was 361 million, an increase of 28% year-over-year, 92% of which were mobile users. Average daily active users in June 2017 was 159 million, an increase of 26% year-over-year.

Weibo focuses on developing a unique and expansive content ecosystem, launching engaging features like Weibo Stories, and attracting KOLs, celebrities, and other influencers to increase the social and viral nature of Weibo is boding well for us.

Mobile social content sharing insights in China 2017

China’s search engine market totaled 23.57 billion yuan (US$3.47 billion) in Q2 2017 with an increase of 25.6% QoQ or 12.2% YoY according to Analysis. Baidu has 77.2% market share in China’s search engines market by total revenues, followed by Google China (9.66%) and Sogou (8.69%).

Baidu remains dominant in China’s search engine market and has over 80% market share by revenues, not counting overseas revenues and channel revenues.

Baidu has 77.2% market share in China’s search engine market by total revenues, followed by Google China (9.66%) and Sogou (8.69%).

Mobile social content sharing insights in China 2017